How to get seed investments: tips from RVC and its partners
5 tips for those who claim the money of the RVC FPI
The main mistake when applying to the RVC Seed Investment Fund is gigantomania
Elena Timokhina, Forbes.ru
The RVC Seed Investment Fund, designed to invest in early-stage projects, concluded 20 deals in 2010 (in total, RVC invested 2.7 billion rubles in venture projects in 2010, 58 companies in the portfolio). Who are the lucky recipients of the money?
One of the projects invested by RVC is the development of a drug for the treatment of kidney cancer, which is being handled by a young scientist Ilya Timofeev. RVC does not work with startups directly, their selection is handled by venture capital funds — partners of the corporation. "A venture partner is a kind of promoter who gathers a team of innovators and scientists, attracts private investment, and then offers a project to RVC funds," says Alexey Teleshev, director of RVC's FPI. In the deal with Timofeev, the venture fund Maxwell Biotech, specializing in investments in medical projects, became such a "promoter".
Timofeev notes that no more than six months have passed from the moment of filing the application to the first money, while most of the paperwork was taken over by Maxwell's specialists. The scientist himself has never even been to the RVC.
According to Timofeev, it is not difficult to find an investment partner of the FPI. At the moment, 73 organizations are already listed in the register of partners. You can apply to any venture fund directly via the Internet. "The main thing is to know where to go," Ilya warns, "it is extremely important to contact the profile fund. If you make a mistake, you just might not find the experts of the required level and lose a lot of time."
After the application is submitted and approved, the longest and most complex process begins — due diligence - full legal, financial, marketing and scientific and technical expertise of the project. This also includes the preparation of a business plan, market analysis, risk assessment and financial potential. It is important that all examinations are absolutely free for the author: the costs of them are borne by the venture partner.
The result of the work done is an investment memorandum, which must be presented and approved at the investment committee, first in the partner fund, and then in the FPI itself. Only after that, the author can expect to receive investments.
Timofeev's application for investment was approved in June, and the first investment tranche of 15 million rubles has already passed: Maxwell and FPI shared the costs equally. "The fact that RVC took on more risks allowed us to enter the project at a very early stage of its development," says Dmitry Popov. "The FPI can finance up to 25 million rubles in one project," explains Evgeny Kuznetsov, Director of the Development and Communications Department of RVC. — The money of the fund and the partner are mixed only at the level of a specific transaction, the maximum share of participation of the FPI is 75%."
"The plus of working with the FPI is the absolute transparency of decision—making," says Ilya Timofeev. - I, as the author, had the opportunity to participate in the development of the investment agreement, was aware of the results of all the examinations carried out." Now Timofeev, together with Maxwell's subsidiary OncoMax, has completed tests to evaluate the properties of antibodies (an antibody-based drug) and has begun the next round of preclinical studies. All the laboratories where the research takes place were selected with the active participation of Maxwell Biotech and RVC.
"In general, RVC constantly monitors the progress of the project," says Timofeev, "we report to them on the results of all stages of testing." But he hardly does any paperwork himself. "I am responsible only for the scientific part of the project, and my reporting forms include a description of materials, methods and research results," says Ilya, "all other reporting on the project lies on the shoulders of employees of Maxwell Biotech and OncoMax.
Here are five tips for those who expect to receive money from the RVC FPI.
1. Thoroughness of application processing"It is worth approaching the issue of documenting the application with special care," advises Elena Alekseeva, Investment director of Softline, a venture partner of FPI.
— The package of documents required to submit an application is quite large (two dozen — Forbes), it takes about a month on average to prepare it. At the same time, it is important to listen carefully to the advice of the fund's experts on the issues of drawing up a business plan and documentation."
2. Presentation skills of the team"When making a decision, we pay special attention not only to the innovative attractiveness of the project, but also to the development team.
It is important to immediately assess the potential of the team: whether it will be able to implement the project to the end, — says Alexey Teleshev. — Of course, the submission of the project itself is also important for us. A proper business plan and a good presentation is a kind of homework that the project team must do together with the venture partner of the FPI. We are also interested in the presentation abilities of the team — it should be able to sell its project not only to us, but also to investors of later stages."
3. Output optionsAccording to Dmitry Popov, managing partner of the Maxwell Biotech Fund, the chances of receiving investments from RVC can be increased:
detailed coverage of the issues of product innovation, its market potential, a description of the intellectual property protection strategy, a competent presentation of the financial and calendar development plan, and most importantly — a preliminary determination of options for exiting the project.
4. Transparent allocation of funds
The task of the venture partner is to prove to the experts of the FPI the reasonableness of investing money and explain the mechanisms of budget allocation. "In my opinion, one of the main mistakes of applicants is the lack of transparency in the distribution of funds in an innovative company," says Elena Alekseeva. — RVC is not a business angel, and due to a lack of understanding of the scheme of spending allocated investments, they may refuse projects. So we will have to work hard on a business plan for RVC."
5. The correct scale of requestsAlexey Teleshev, director of the FPI, calls gigantomania as the most common mistake of those who apply for investments in RVC: "All projects look at a very long perspective.
We give seed investments: to start a business, to prepare and understand the market, to create a prototype or the first prototype."
Portal "Eternal youth" http://vechnayamolodost.ru16.02.2011